1 Megacap Tech Stock That Could Split Its Shares Next

Core Viewpoint - Netflix's stock price has surged approximately 40% this year, leading to speculation about an imminent stock split as shares trade above $1,200, a significant increase from below$200 in May 2022 [1][2]. Group 1: Financial Performance - In Q1 2025, Netflix reported a revenue increase of 12.5% year-over-year, reaching about $10.5 billion, while earnings per share grew by 25.2$2.7 billion, marking a 25% year-over-year increase [4]. - Management anticipates full-year revenue growth of 11.5% to 14.1%, driven by healthy member growth, higher subscription pricing, and a doubling of ad revenue [5]. Group 2: Stock Split Considerations - Netflix has not executed a stock split since 2015, when it performed a 7-for-1 split, reducing the stock price from about $700 to$100 [6]. - Historical trends suggest that stock splits are more likely when a company's share price is high relative to peers and the company is performing well, both of which apply to Netflix [7]. - Currently, Netflix shares trade significantly higher than other tech giants like Microsoft, Meta Platforms, Apple, and Nvidia, strengthening the case for a split [8]. Group 3: Market Sentiment and Valuation - A stock split would not alter the company's fundamentals but would make shares more accessible to retail investors, reflecting strong underlying business momentum [9]. - Despite strong business performance, Netflix shares are trading at 59 times earnings, indicating that investors may already be pricing in future growth [10]. - The combination of double-digit revenue growth and margin expansion is expected to significantly boost earnings per share, although the current valuation suggests high expectations for continued growth [10]. Group 4: Future Outlook - With a rising stock price, robust revenue growth, and a developing advertising business, Netflix is positioned as a leading candidate for a stock split, although no official plans have been announced yet [11].